Pembina Pipeline is set to acquire Kinder Morgan Canada and Kinder Morgan’s US portion of the Cochin Pipeline system for C$4.35 billion ($3.28 billion).
The move means Pembina will acquire strategically located assets including the Cochin Pipeline System, the Edmonton storage and terminal business and Vancouver Wharves, a bulk storage and export/import business.
The Cocin mainline system represents a full contracted cross-border pipeline system that connects Pembina’s Channahon, Bakken and Edmonton area assets and is connected to markets in Mont Belvieu, Conway and Edmonton. There is also further potential to connect the eastern leg of the Cochin Pipeline System to Pembina’s assets and markets in Sarnia, Ontario.
Additionally, the acquisition includes a significant crude oil storage and terminalling business in Western Canada’s key energy complex, which connects Pembina’s conventional and oilsands pipeline to all major export pipelines, providing increased flexibility and greater egress options to customers.
The assets are predominantly supported by long-term, fee-for-service, take-or-pay contracts, which are underpinned by investment grade counterparties. The assets are expected to generate adjusted EBITDA of $350 million in 2019.
Mick Dilger, Pembina’s president and CEO, says: ‘This acquisition is highly strategic for Pembina, providing enhanced integration with our existing franchise, entrance into exciting new businesses and clear visibility to creating long-term value for our shareholders.
‘It represents an ideal opportunity to continue building on our low-risk, long-term, fee-for-service business model while extending our reach into the US through a highly desirable cross-border pipeline. Further, it will enhance our diversification as well as Pembina’s customer service offering as a leading provider of integrated services to hydrocarbon producers in Western Canada.’